[ANALYTICS OUTSOURCING] Analytics Outsourcing: Gaining Ground

The offshore analytics space has evolved from being dominated by captives of large companies to embracing large vendors offering end-to-end specialized analytics solutions to specific verticals.

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GS100: 2011 Global Services Compendium

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Demand Drivers

With ever growing competition and globalization, analytics has become critical for all businesses to support tactical and strategic decision making. Today, companies can choose from a host of platforms and services based tools that can be deployed to make intelligent use of information enabling business decisions that impact both top line and bottom line.

Arun Kharbanda, business unit head, Research & Analytics, WNS Global Services stated why analytics is used by their clients, “To enable our clients in their Top line growth by using analytics to create a ' 'One view of the Customer', improving customer life time value through better acquisition.

The HfS report on analyticsoutsourcinghighlighted the following drivers:

Leveraging IT and BPO offshoring experience and ecosystem Companies with existing outsourcing relationships are looking to leverage their IT-BPO offshoring experience to source analytics solutions, preferably from the same service provider. In most cases, the third-party service providers developedanalyticssolutions in a bid to move up the value chain.

Availability of cross-functional, multi-skilled talent As the scale and scope of analytics expanded to accommodate several core functions, the delivery of analytics called for maintaining highly specialized manpower across more diverse domain areas. This manpower often remained under-utilized. Given their high cost, companies increasingly started looking at third-party service providers to help. Increasing demand for analytics also led to the emergence of pure play analytics service providers. These providers have teams with deep domain knowledge, technology and statistical expertise.

Cost arbitrage for low-end analytics. According to HfS Research, for a typical analytics project, talent costs constitute approximately 60% to 70% of the total costs. With other costs (infrastructure, etc.) significantly lower than in onshore locations, cost arbitrage can range up to 50% for offshore locations.

Reduced time to market With increasing competition and the urgency to obtain first mover advantages, it has become imperative for firms globally to access talent to provide pertinent data supported by thorough analysis at a faster and more efficient pace. Offshore delivery centers are attractive as they come with faster time to market and provide accompanying support services on a 24x7 basis.